KUALA LUMPUR: Malaysian palm oil futures rose on Tuesday evening, lifted by strength in rival edible oils and as demand expectations improved, traders said.
"We're seeing a bit of bargain-buying ... Exports could improve as buyers rush to take advantage of Malaysia's tax suspension," said a Kuala Lumpur-based futures trader, referring to a three-month palm oil export tax suspension expected to increase demand and boost prices.
The Malaysian government introduced the move in early January. The zero tax is set to end on April 7.
The gains may not be sustainable, though, as production in March is expected to rise, the trader added.
"Production is set to recover strongly," he said.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was up 1.3 percent at 2,413 ringgit ($618.96) a tonne at the close of trade, a second straight day of gains and its biggest daily rise in two weeks.
Before eking out a gain of 0.2 percent on Monday, the contract fell to its lowest in more than 1-1/2 years at 2,350 ringgit a tonne on Monday.
Trading volumes on Tuesday stood at 49,862 lots of 25 tonnes each at the end of the trading day.
Another trader said gains in related edible oils such as soyoil on the U.S. Chicago Board of Trade and China's Dalian Commodity Exchange lent support to palm.
Palm oil prices are impacted by movements in rival edible oils as they compete in the global vegetable oils market.
The Chicago Board of Trade's May soybean oil contract gained 0.5 percent on Monday, and was up on Tuesday by 0.6 percent.
The May soybean oil on China's Dalian Commodity Exchange rose 0.6 percent and the Dalian May palm oil contract firmed 0.5 percent.
Palm oil may bounce into a range of 2,403-2,420 ringgit per tonne, according to Wang Tao, a Reuters market analyst for commodities and energy technicals. - Reuters